Romania\u2019s government deficit narrowed to 7.8% of GDP last year, down from 9.2% the previous year, according to figures published on Wednesday by the European statistical office, Eurostat. However, the deficit remained above the 6.6% level recorded in 2023.<\/p>\n
<\/p>\n
Despite the improvement, Romania continued to have the largest budget deficit in the European Union, while the average deficit stood at 3% across the Eurozone and 3.1% across the EU as a whole. Romania was followed by Poland, Belgium and France, which also recorded some of the bloc\u2019s highest government deficits.<\/p>\n
<\/p>\n
According to Eurostat, a total of 11 EU member states reported deficits equal to or above 3% of GDP. By contrast, four countries recorded budget surpluses last year: Cyprus, Denmark, Greece and Portugal.<\/p>\n
<\/p>\n
European Commission forecasts suggest that Romania\u2019s budget deficit could fall to around 6.2% of GDP this year. However, reducing it below the EU\u2019s 3% threshold by 2031 will require a further fiscal adjustment amounting to approximately 3% of GDP.<\/p>\n
<\/p>\n
Economic experts say the scope for reducing the deficit through higher taxation has largely been exhausted, as both businesses and households are already feeling the burden of increased taxes. At the same time, Romania\u2019s economy is expected to report only modest growth this year.<\/p>\n
<\/p>\n
The fiscal measures announced by the new government could nevertheless support the ongoing budget adjustment process without the need for further tax increases. Analysts warn that narrowing the deficit becomes more challenging in a slowing economy and argue that improving VAT collection should be the government\u2019s main tool for increasing budget revenues.<\/p>\n
<\/p>\n
Now that the government crisis has officially come to an end, following almost six months of political deadlock, Prime Minister Luca Niculescu has reassured European partners that Romania will maintain the deficit targets it has pledged to observe.<\/p>\n
<\/p>\n
He also pointed to the three major credit rating agencies, Fitch, Moody\u2019s and Standard & Poor\u2019s, all of which have retained Romania\u2019s investment-grade rating, albeit with a negative outlook, despite the country\u2019s very large budget deficit.<\/p>\n
<\/p>\n
It is also worth noting that Moody\u2019s views the installation of a new government and the timely adoption of the 2027 budget as positive developments for Romania\u2019s credit standing. According to the agency, approval of the budget by the end of this year would support continued fiscal consolidation and strengthen the credibility of the government\u2019s commitments.<\/p>\n
<\/p>\n
In a recent assessment, Moody\u2019s underlined the importance of political stability and a credible budget framework, particularly given Romania\u2019s substantial financing needs and the more restrictive conditions currently prevailing on international financial markets.<\/p>\n
<\/p>\n
The agency has maintained its projections for a gradual reduction in Romania\u2019s budget deficit over the next two years. According to its forecast, the deficit is expected to go down to 5.8% of GDP this year and to 5.5% next year. (VP)<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Romania\u2019s government deficit narrowed to 7.8% of GDP last year, down from 9.2% the previous year, according to figures published on Wednesday by the European statistical office, Eurostat. However, the deficit remained above the 6.6% level recorded in 2023. Despite the improvement, Romania continued to have the largest budget deficit in the European Union, […]<\/p>\n","protected":false},"author":107,"featured_media":715905,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[37738],"tags":[30079,198620,34400,31158,198619,198580],"coauthors":[113282],"class_list":["post-1074245","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-today-in-the-news","tag-budget-deficit","tag-credit-rating-agencies","tag-eurostat-report","tag-financial-markets","tag-fiscal-adjustment-measures","tag-luca-niculescu-cabinet"],"acf":[],"yoast_head":"\n